The Great Geithner Giveaway, Part II

But for the facts in the case, let’s turn to Bloomberg.com’s Christine Harper and her May 6 dissection of Goldman Sachs’ footings:

“Trading and principal investments accounted for 61 percent of the bank’s revenue in the first quarter of 2009, up from 59 percent in the first quarter of 2008. Net interest income, the difference between the interest the firm pays and what it charges, doubled from the first quarter of 2008 as the company’s interest expense dropped 76 percent, the filing showed.

“Banks such as Goldman Sachs are benefiting from lower borrowing costs after the Federal Deposit Insurance Corp. in October started guaranteeing bank debt issues that mature within three years. Goldman Sachs has issued about $22 billion of debt that’s guaranteed by the FDIC, according to data compiled by Bloomberg.

“Today’s filing showed the weighted average interest rate paid by Goldman Sachs on its unsecured short-term borrowings dropped to 2.14 percent in March from 3.37 percent in November.”

Nice work if you can get it, and Goldman Sachs apparently can.

Then we need to stir into the pot the fact that the competitive pressures that would normally work to lower the Treasury’s (that is, We the Taxpayers’) borrowing costs have been significantly reduced by the disappearance and decimation of Bear Stearns, Merrill Lynch and Lehman Brothers, and the virtual incapacitation of Citigroup. Finally, the circumstantial evidence is mighty powerful that the Goldmans, etc., are using these “free money” profits to repay the TARP loans they scrambled to take down last fall, and thereby disengage themselves from any meaningful federal oversight.

The questions raised are obvious:

Why doesn’t the Fed lend directly to the Treasury, and save We the Taxpayers the spread cashed by Goldman et al.?

Why just hand the banks these profits without reserving a ratable claim on them—in the form of equity, an excess-profits tax, an interest premium—for We the Taxpayers? Are we not entitled to a piece of the action on terms as good as St. Buffett? It’s our money.

And, with apologies to Pete Seeger, where have all the toxic assets gone?

I hope by now you get my point. This stinks. Stinks!

The callow, squeaky-voiced, miserable sloganeers in charge of effectuating and explaining away this scandal, Messrs. Bernanke and Geithner, like to talk of “transparency.” But in the World According to Goldman Sachs, transparency is a relative term. The philosophy that governed the Clinton administration—namely that if everyone’s lying, no one is—seems merely to have been modified to suit the times.